Processing and manufacturing industries play an important role in the overall growth of the economy, but over the years, the development of the manufacturing and processing industry has faced many barriers. In order to increase the added value of this industry, the Ministry of Industry and Trade is planning to build a separate law on industry, and at the same time press on forming the leading enterprises in the industrial sector of processing and manufacturing.

In the first eleven months of 2020, the IIP of the manufacturing increased by 4.7%
(the same period in 2019 increased by 10.6%). Photo: Nguyen Thanh 

Pillars of economic growth

According to the Ministry of Industry and Trade, industrial production in November 2020 continued to flourish, especially the processing and manufacturing industry, with a high increase compared to the same period last year, positively contributing to the overall growth of the economy.

Ms. Trinh Thi Thanh Thuy, Deputy Director of the Institute of Strategy and Policy Research of Industry and Trade (Ministry of Industry and Trade), said that this year many countries have leading manufacturing and processing industries in the world but all face difficulties. In that context, Vietnam is a bright spot and an exception when the economy grows positively. Positive growth is based on pillars in industry and manufacturing, especially industries with high technology content and value such as electronics, electronic components, computers and mechanical products for the automotive industry. Although agricultural processing and garment processing have not achieved the same growth as in previous periods, they obtained remarkable results.

Looking at the whole process, Mr. Pham Tuan Anh, Deputy Director of the Department of Industry (Ministry of Industry and Trade), emphasized that in the 2016-2019 period, the industry alone contributed 30% of GDP, which is the group of industries that contribute to the largest budget.

Industry group structure has also had a very positive change. Specifically, the proportion of processing and manufacturing industry increases, avoiding dependence on the mining industry.

In recent years, there are many groups of industries with very rapid development, such as electronics, textiles, footwear, with their export value ranking "top" in the region and the world. Recently, Vietnam has established many large private economic groups such as Thaco, Thanh Cong, Vinfast that show the way to encourage businesses to participate in industrial development.

"In the industrial sector, the manufacturing and processing industry contributes the most in GDP in terms of added value, creating a premise and foundation for the industrial development and modernization of the country. Over the past, if we compare the whole economy, the industry in general, the manufacturing and processing industry in particular has the strongest breakthrough. The rate of value added growth of this industry is much higher than the growth rate of GDP in the last 5 years," Mr. Tuan Anh said.

Develop a separate set of industry laws

Besides the achieved results, the leaders of the Industry Department also pointed out that the Vietnamese processing and manufacturing industry still has many limitations and is not commensurate with its potential.

Ms. Trinh Thi Thanh Thuy said that the most difficult problem to develop the manufacturing and processing industry is that domestic enterprises are short of resources and input materials, based too much on foreign markets, especially raw materials imported from China and Korea.

"We focus on outsourcing, processing, and are depending on FDI enterprises," Ms. Thuy said.

Regarding the limitation, Mr. Tuan Anh said the first group was inadequate construction and allocation of resources for industrial development in the past.

Specifically, the development of strategies and policy planning is not suitable for the current economic development. Credit policies for businesses have not met the needs of businesses. Given the evidence, FDI enterprises entering Vietnam receive preferential treatment from foreign credit institutions or parent groups with low interest rates. Mr. Tuan Anh said that Vietnam's loan interest rate is high, so Vietnamese enterprises lose out from the beginning.

The second group of causes pointed out by the leaders of the Department of Industry is that the State's resources for industrial development are inadequate. Vietnam lacks strong industrial corporations to lead the economy.

"Industrial sectors need large capital. Meanwhile, businesses only focus on investment in areas and sectors such as real estate and commerce that have the ability to recover capital faster. Therefore, it is necessary to support the State to call enterprises to participate in the industrial sector," Mr. Tuan Anh said.

In order to help manufacturing enterprises participate in the global supply chain, Mr. Tuan Anh said that the Department has always actively coordinated with corporations and enterprises to produce complete products such as Samsung and Toyota, and then there are connections with domestic enterprises for the two sides to meet.

"In the long term, we are completing policy mechanisms to support industrial enterprises and manufacturing. Specifically, the Industry Department is currently implementing internal departments. Content in Resolution 115 / NQ-CP dated August 6, 2020 of the Government on solutions to promote the development of supporting industries, in which the important content is to coordinate with the State Bank and the Ministry of Finance for a main construction policy of subsidizing interest rate differences for supporting industry enterprises as well as enterprises in the manufacturing and processing industry," Mr. Tuan Anh said.

Also, according to the leaders of the Industry Department, this Department is studying the need to build a law on industry, formally institutionalize the industry content in this law, avoiding the situation of having to be governed by other laws; continue to research to form industrial groups, create "cranes" leading the way to entice enterprises of the next class to develop.